Impacts of Technology on Productivity of Small Businesses

INTRODUCTION

Background of Study

The Small scale sector constitutes an important and plays a critical part of the Kenyan economy. They contribute towards the national GDP, creation of employment opportunities especially for low and semi skilled individuals in the society, they produce cheap goods and services and therefore they are crucial for a developing economy like Kenya.

APEC Leaders and Ministers set the Bogor goals in 1994 and recognized that innovation is the main driving force for economic growth to meet their goals. This research contains some items for comparison and identification of best practices including: innovation environment in place conducive to SME innovation and production and their respective promotion programs in marketing, management innovation, technology and in financing.

By identifying and also making use of the small niches in the economy provides opportunities for independent work thereby helping in reducing the regional imbalances. The small scale sector therefore remains high on the government’s agenda, policy making and academics.

Existing literature demonstrates that small firms contribute significantly in terms of innovations, and again, the studies on innovation tend to concentrate on high-tech industries such as computers, software, and engineering industries. Despite the rising number of innovation studies in various sectors, there are only a few specific innovation studies in the small scale sector (Hausman, 2005).

Today production industry has emerged as one of the most profitable industries worldwide (Gopalakrishnan & Damanpour, 2014). The recent significant shift in the production sector is due to the urge of coming up with better, faster, more safe and reliable products in the market. Countries worldwide have experienced technological growth in production sector with others contributing a large percentage towards their various GDPs.

The production industry is lucrative, dynamic, innovative and fast paced. With quite long life cycles of cosmetics products, varying climatic conditions and rapidly changing attributes of market products compel manufacturer to keep their pace with changing market demand (Kumar & Michelle, 2006). Manufacturers therefore need to be innovative, not only in the manufacture of products but also in presentation their products to the market. There are however very few researches done in the investigation of the impact of innovation in production with an interest in the Kenyan setting.

History of Kapsabet Town

The establishment of Kapsabet town in the 1980 has become a major factor for the growth and development of the community. As the town expanded, the businesses and its markets also flourished into what has been known as the proposed capital of Nandi county and the divisional administrative of Kapsabet Administrative Division (Hornsby, 2012).

The town of Kapsabet is an agricultural town in the Nandi County. The residents mainly practice mixed subsistence farming. They sell their surplus produce in the local markets and others end up as exports to other countries such as the Tea they produce. Trading is a major economic activity at Kapsabet town. There are attraction sites that facilitate additional income to the region such as Kaptaroi National Park. In the environs of the town is Kibuye Market which is the oldest big town in East and Central Africa. Business established at Kapsabet  town have grown into several types of business enterprises ranging from shops, hardware, retail shops, supermarkets and big hostels which help the business men improve their standards of living (Leys, 2005).

The tea research foundation of Kenya was established to replace the former tea research institute of East Africa with the objective of promoting research and investigating on the problems relating to tea and other crop systems of husbandry associated with tea throughout Kenya. This includes the productivity (yield) quality and suitability of the land in relation to tea planting and matters ancillary thereto. This has come up with better ways of tea production by improving the clones, appreciating technology for yield improvements (On the quality of green tea leaves) and the quality of tea products (Odinga, 2008).

Several banks in the region have come up with different innovation schemes to improve and increase the production of the small and large scale farmers. Few days ago, the bank of Africa through the Managing Director of the bank in Kenya seeks to anchor the tea industry through an innovative credit facility expected to scale up the farmers productivity. The Chai loan is to provide short term financing to small scale farmers to support the farming operations critical to increase yield and revenue (Etherington, 2009).

Any innovation in the agricultural sector in the region positively affects the production and the sale of other products as the consumers will have more disposable income with them thereby buying more products. These involve actions have a positive impact on the mindset of the residents as they will have more confidence in obtaining more yield and therefore ne ready to spend more, increasing their number of transactions with their banks due to the fee charged on saving and withdrawing. More small scale producers can also therefore be able to obtain the funds from the banks as loans or even from their mobile banking services such as M-shwari. Agricultural shows are also helpful as they directly put the knowledge invented to the farmers’ and small business exposure and the use for development thereafter (Magambo & Kilavuka, 2011).

Without the innovations, farming and subsequently business in the town wont thrive and therefore the researcher saw the need of coming up with this research in order to give the importance of innovation.

Statement of Problem

The researchers aimed at finding out the impact of innovation to the production in both quality and quantity and their effects to the society. There are many forms of innovations that are embraced by the small scale producing businesses. These technological innovations have both direct and indirect impacts to the environment and therefore need to be looked into to establish on the viability of such innovations. Small scale enterprises also compete and some may come up with a way to increase on production at the expense of the society’s health.

This study was conducted to find out how the small scale businessmen and small scale producers embrace the new technological advancement and the effects thereafter to its environs. The researchers wanted to identify the consumer’s perception and their behavior towards the new technology. Focusing on the small holder tea farmers, their yield in the region continues to reduce despite the organizations recommendations on innovations aimed at enhanced production. Studies have focused on production-based innovation but the access to information is also an important factor influencing production and therefore was investigated into. In addition to this, limited work has been done to quantify and document the effect and efficiency of information dissemination to impact yield among the small holder farmers.

Objective of Study

The overall objective of our study was to know the impact of technology on the production of small scale businesses at Kapsabet town and thereby their influence to the society. Some of the other objectives are;

1. To identify the factors that influence the type of innovation used by small scale business people at Kapsabet town
2. To establish the sources of information used by the small scale business men to improve on their production in the region
3. To find out the extent at which information dissemination affect the production and sale of the products among the small scale businesses

Research Question

The following research questions are used in order to clarify the researchers work;

1. What factors influence the types of innovations used by small scale business people at Kapsabet town?
2. Which types and sources of information are used by the small scale business men to improve on their production in the region?
3. To what extent does the information dissemination affect the production and sale of products among the small scale businesses?

Hypothesis

Ho: There is no significant relationship between the production and the innovations among the small businesses at Kapsabet town.

H1: There is significant relationship between the production and the innovation among the small businesses at Kapsabet town.

Assumptions

The assumption is that with increased use of better technology, more businesses will increase their production to a much better level thereby increasing the job opportunities to both the specialized and unspecialized workers and reduce the number of job seekers in the market resulting to a better economy. Kenya being the world’s third best producer of tea and Kapsabet town being one of the best producer regions in Kenya, we expected to find a very sophisticated and innovative means of production and also the supply of information in the region.

Significance of Study

This study tries to highlight some of the innovations and the effects they have to the small scale businesses in the Kapsabet region and also the supply of the information in the region on a new and improved system of production and business. This research will help create awareness on the quality, quantity, use and implementation of the new and improved systems of production among the small scale producers and the innovations among the business field and their relation to one another. This study also signifies who the potential buyers of the products are and their expectations and views on the new technologies and innovations implemented by the small businesses. Finally this research will enrich our knowledge and skills on how to undertake any research work in the future.

Justification of Study

Over the past years, a couple of innovations have come up with the mind of stabilizing and raising the level of income of the small businesses. A number of the banks have also devised and come up with schemes of providing funds to these businesses to enable them thrive. A number of researches have been written though a need of more on the small Scale Innovation Research program to encourage small businesses to engage in researches that has potential of commercialization. These researches must also be implemented and different organizations must take it as their task to ensure the spread of the new methods of technology among the small businesses. With this observation the researcher saw the need of finding out what could be the key reason for these hence these research.

Scope and Limitation

This study was carried out at the Kapsabet town with the focus on the innovations among the small scale business individuals. This research aimed at looking into and identifying how the supported scientific excellence and technologies and innovations invested upon by the government to build a strong national economy are utilized. The researchers also want to identify if the goals of the different investors and government are realized including stimulating technological innovations, meeting the research and needs of the technology, fostering and encouraging innovations and entrepreneurship by socially and economically discouraged persons and also increase the private-sector commercialization of the innovations derived from the federal research and development funds.

It covers a wide range of innovations being implemented by the small scale businesses. Some of the limitations that the researcher anticipates include poor communications since Kapsabet town is dominated by one community and therefore some businesses may not be able to understand and give a direct feedback to the questions in the research. Some of the entrepreneurs may not want to share the information in fear of being used by their competitors. Some of the employees may not share the needed information because of the fear of intimidation by the management and even some not to give the exact and true information. Another limitation is that the management of these firms may not allow me to get this information in fear of using this information to work against them directly or indirectly.

Theoretical Framework

Availability of new technologies and innovation in the small businesses enhances the increase in production and the satisfaction to the products obtained in the market because they are timely and of the right amount reducing shortages, enhancing the speed taken in a transaction and also makes the work easier to the businessmen (Etherington, 2009). With the increase in technology, an individual presently can send money and put an order for a product that will be delivered at the door steps rather than going there himself. This brings about the sense of customer satisfaction because all their needs are taken care of and they can be easily obtained at ones and at one point hence increasing their rate of consumption on the products.

Consumer’s behavior is also improved since the retailers are able to serve them better using a bar code reader on a product making it faster and thereby reducing the long queues as otherwise done manually . This leads to increased levels of consumption in and also the retailer may easily know the amount of specific goods still held in the shelves and there for order for more stock on time. The possible outcomes of all this are the entrepreneurs being able to know their inventory levels as the customers consume the products (Baghestani, 2014).

Conceptual framework

The availability of technology for small and medium enterprises (SMEs) is a topic of significant research interest to academics and an issue of great importance to policy makers around the globe. The value and uses of technology in targeting improvements in small scale businesses is neither new nor is it restricted to any one region. Therefore, the growth and development of small enterprises is pegged to the existence of some level of entrepreneurial climate or enterprise culture in the society.

Entrepreneurial skills exist in all cultures; however, they may vary in degree as per the environment, traditions and history. Such skills and motivations should be supported by a well-defined institutional structure that is understood by the participants, and which includes formal rights and protections to physical and other property. The access to resources in the form of raw materials, labor, capital and infrastructure leads to the development of small enterprises participating in producing, marketing and processing of farm produce. According to (Rice, 2002), members of a household will redirect their labor away from land-based activities and their direct involvement upon the existence of:

1. Pull factors such as higher incomes in the non-farm sector relative to the farm sector; and
2. Push factors such as increase in agriculturally sourced risk
3. Mechanization

The main goal behind enterprises is to generate income for the entrepreneurs. In the case of marketing enterprises, that requires that goods have to be sourced, transported, transformed, and marketed at a very optimal price and speed. Therefore, technology will serve these purposes better.

 

 

Innovation

(Potocan & Mulej, 2009)

According to the table above, organizational learning is conceptualized as the independent variable. Firm performance is the dependent variable and is moderated by innovation. According to this model, organizational learning is measured according to the acquisition of knowledge, dissemination of information, the interpretation of this information and the memory of the organizational. Firm performance on the other hand is measured in regard to sales growth, profitability, return on investment and the market share. Innovation is measured according to technology based, behavioral based and product based

Definition of Terms

Innovation is the application of new solutions that meet new requirements, inarticulate needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or  ideas that are readily available to markets, governments and society.

Investor is a person who allocates capital with the expectation of a financial return. The types of investments include, gambling and speculation, equity, debt securities, real estate, currency, commodity, derivatives such as put and call options.

Technology: the branch of knowledge dealing with engineering or applied sciences for practical purposes, especially in industry’s machinery and equipment developed from the application of scientific knowledge

Small business: this refers normally to privately owned corporations, partnerships or sole proprietorships that constitutes relatively smaller in terms of government support and tax policy varies by country and by industry ranging from fewer than 15 employees under the Australian Fair Work Act 2009, 50 employees according to the definition used by the European Union, and fewer than 500 employees to qualify for many U.S. they can be classified also in terms of other methods such as sales, assets or net profits.

Business: this refers to an organization or enterprise that engaged in commercial, industrial or professional activities. It can also be on any industrial, commercial or professional activity undertaken by an individual or a group.

Retailers: this is the sale of goods to ultimate consumers, usually in small quantities.

Market: this refers to a medium that allows buyers and sellers of a specific good or service to interact in order to facilitate an exchange. The price that individuals pay during the transaction may be determined by a number of factors, but price is often determined by the forces of supply and demand.

Entrepreneur: this refers to a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

REVIEW OF RELATED LITERATURE

Introduction

The importance of small businesses to the economy is evident in many ways. According to (Pond, 2013) small businesses constitute 97% of all businesses in the United States and employ more than 58% of the labor force. The small business sector is growing at a very impressive rate with small businesses making up more than 50% of the sales and products in the private sector in Kenya (Karua, 2012). It has been said that specific success strategies used in one business may not work for another; as all businesses, like people, are different. There are so many variables to sift through. Strategic planning contributes to a long-running success for businesses. Other factors for success include

• Quality
• Customer focus
• Innovative marketing practices
• Flexibility and employee empowerment

Smaller firms play an important role in technological change. Smaller firms have many advantages as sources of innovation because they are quick to adopt new and high risk initiatives. They facilitate structures that value ideas and originality; and they have a better capacity to reap substantial rewards from market share in small niche markets. Statistically, small firms outperform large firms in terms of patents per employee by 13 to 14 times (Parry, 2013).

The apparent inverse relationship between size of the firms and growth is due to the fact that nearly all young firms start small. This means that it is not smallness that drives net job creation but the relative youth. The most recent critique of the small business sector as key to employment growth is also the strongest. While attention typically focuses on small business in relation to job creation, it appears that the true driver of new jobs is young and innovative firms. However, the correlation disappears controlling the age of the firm. Researchers have found that startups are responsible for about 20 percent of gross job creation (Karua, 2012).

If a young firm in Nandi constituency survives, it will tend to grow faster than its more mature small counterparts who tend to be net job losers. This relation is both in Kenya and outside world. Dynamics for small and young firms that are consistent with economic models of creative destruction in the marketplace have to be developed that will result to policies that focus on size. Without accounting for this dynamics, there is likely to have limited success.

Different theories on the role of small firms in the economy have been developed since the early 1900’s. (Odinga, 2008) considered small firms an important venue for innovation and change to be incorporated into the economic system. Furthering this idea, scholars have attempted to link the size of firms with their innovation capability. However, empirical studies addressing these theories firm size and innovative capability. Others have identified no relationship or even a negative one (Baghestani, 2014).

The most extensive studies found a U-shaped relationship between firm size and innovative intensity in terms of innovations per employee. That is, innovative intensity was strongly affected by small and large firms. However the impact was weaker in middle-size firms. This result is not robust because the results change when non-innovative firms are included in the sample. It has been found that over a long time frame there are fewer large growth changes within a business than observed in shorter time frames. Moreover, employment swings within a business are more likely to occur in shrinking firms than in those that are expanding (Hausman, 2005).

Small and medium-sized enterprises are important in the economic growth and this has made them a central element in much recent policymaking. Of particular interest have been policies designed to promote and facilitate the operation of the innovation process within SMEs, and there has been substantial expansion of this kind of effort. Despite this interest, the knowledge base about how SMEs actually undertake innovative activities remains limited. This paper reports on a literature survey of Kapsabet town small businesses innovation over the past decade and tries to characterize the state of knowledge about SMEs and innovation (Kumar & Michelle, 2006).

Small businesses seek to create an environment nourished by open discourse and to empower the next generation of scholars with the necessary support to accelerate and advance new and important thinking on economic issues. Grants are awarded primarily to individuals and teams affiliated with academic institutions, think tanks and other centers of vital research around the country. Different organizations encourage scholars from around the world in economics as well as in related fields including history, sociology, anthropology, psychology, political science and physical sciences to submit grant proposals (Hausman, 2005).

Advantages of technology

Market Expansion: Innovative technology can help even smaller businesses compete on a global stage. Innovations such as the Internet, for example, allow a sole proprietor to offer her products or services to prospects around the world through the use of a website. She can provide detailed product descriptions and photos of her products to provide prospects with all the information they need to make an informed buying decision. Social media vehicles like facebook and Twitter also allow her to network with others who may have an interest in her business, without the need for face-to-face interaction (Parry, 2013).

Cutting Costs: Innovation can also help business owners keep costs to a minimum. With the use of automation, a small manufacturer can reduce his dependence on human beings to perform some of the necessary production processes. As a result, the business can reduce employee expenses such as salary, benefits and turnover. Technology can also help to streamline the production process, eliminating costly waste. Implementing a “lean” manufacturing process like Six Sigma, for instance, offers the opportunity to meet customer demand more quickly and efficiently.

Employee Concerns: While innovative technology may reduce the dependence on a workforce, the flip side is that employees lose jobs in the process. In the case of a small business owner, this may mean she needs to make a difficult choice between increasing profits or letting go long-time employees. Even if the implementation does not result in job loss, some employees may have difficulty adapting to the change. There may also be a learning curve when instituting the change, resulting in reduced productivity in the short term (Pond, 2013).

Upfront Cost: While new technology can result in savings in the long run, it sometimes results in a significant upfront expense. A small business owner may not have the resources to purchase a state-of-the art computer system or new machinery, or may need to borrow the money to do so. If the new purchase doesn’t increase production or reduce expenses over the long haul, it could have a crippling effect on the long-term viability of the operation.

Creativity: Innovation companies generally employ a large number of creative and competent individuals who can not only introduce a new product, but also see it through to completion. Innovation companies often employ large numbers of people who oversee all stages of product development and ensure the product’s success in the market through a process of conceptualization, design and implementation that results in a finished product that is highly desirable to consumers. For small businesses that wish to stand out in the crowd, finding and hiring the most creative talent possible is essential for success (Pond, 2013).

Leadership: The creativity exhibited by innovation companies often puts them in positions of leadership within their respective industries. Apple, for example, regularly makes the news for its latest innovations which generally set the bar for other similar products that are later developed by other companies trying to piggyback off of their success. By the time these companies finally manage to catch up, Apple and other companies taking a leadership role have generally created another innovative product to once again lead the way. Although small business is not generally in a position to take this type of leadership role from the outset, they can develop their reputation and do so over the course of time, one product at a time (Odinga, 2008).

Experience: Innovation companies also have the advantage of experience on their side. They typically get the process of product development down to an exact science that can repeat over and over again. Their ability to repeat this process with efficiency generally sets them apart from other companies that try to create new products for the first time. For small businesses this generally involves a considerable amount of trial and error.

Name Recognition: Innovation companies generally do not need to do an excess amount of advertising or branding to capture their target market. Instead, their name alone carries considerable weight in their industry and people await their products to hit the market. Their name recognition generally sets them apart from other companies in the market, which means that they need to do very little to promote their products. This is probably one of the more difficult things for small businesses to establish. However, with just one truly innovative product, these companies can also begin to carve their niche in the market and gain that same type recognition (Baghestani, 2014).

Benefits of innovation to Small Business

Innovation to small business can be linked to positive changes in efficiency, productivity, quality, competitiveness and market share. A study showed that lack of motivation, extra work, unclear perception of roles, lack of confidence, insufficient learning culture, lack of innovation, lack of time, and lack of resources negatively impacted organizational learning. From the positive perspective, motivation, enthusiasm, involvement, clarity and understanding of roles, increased responsibility, strategic partnerships, developing a learning culture, senior management support, organization restructure, job redesign, and investment in human resources all offer significant improvements to organizational culture (Pond, 2013).

Economic Growth and Benefits through Innovation:

• Increase in investment (more tools, machines, factories)
• Innovation (new tools, new robots, new techniques)
• Improvements in workforce quality (instead of quantity)
• Infrastructure (telephones, roads)
• Social and legal institutions (ownership of land)
• More effective use of available resources (oil)

(Baghestani, 2014)

Internal Disadvantages

The most obvious disadvantages innovators create occur within their own organizations or departments. Seeking new solutions requires experimentation, failure and, therefore, high costs with uncertain return. Furthermore, innovation disrupts existing patterns and can cause a significant dip in productivity and morale as workers adjust to the innovation. If the new idea will truly be a long-term improvement, this may be worthwhile, but constant innovation for its own sake may keep a company from finding its groove (Pyka & Scharnhorst, 2009).

External Disadvantages

Innovators can cause disruption to the outside world. Changing the way a business runs can break down existing relationships with suppliers, business partners or customers. Too much change over too short a time can cause a loss of consistency or credibility, especially if the nature and purpose of the innovation is communicated poorly. Innovators may be especially problematic if they insist on the value of an idea the rest of the company refuses to implement. The consequences can range from time-wasting arguments to fundamentally destabilizing the company (Parry, 2013).

Drivers of Small Business Innovation

The drivers of small business innovation fall into three broad categories:

Necessity: Small businesses operate in competitive and changing markets. Pressures to meet payroll, reduce prices and costs, provide customer value and respond to customer complaints are continuous. Competition is always a threat and resources are limited. Small business success often hinges on making constant changes and improvements in the business (Pond, 2013).

Opportunity: Entrepreneurs are opportunistic by nature and small businesses are constantly looking for new ways to make money, save time, improve their processes and create more customer value. Because they are close to their customers, and have owners and decision makers that are closely involved, small businesses are well positioned to see and pursue new opportunities (Kasekende & Opondo, 2003).

Ingenuity: Many small businesses spring from the desire for something that doesn’t exist. When that need is shared by millions, these businesses could join the ranks of larger success stories. Gatorade was created to rehydrate football players (Karua, 2012).

RESEARCH METHODOLOGY

Introduction

This chapter of the research identifies the methods used to analyze the data collected from the correspondents for the research. The major areas consist of the proposed research design, area of study, target population and sampling procedure adopted by the researchers.

• Area of study
• Data gathering sources
• Research instrumentation
• Methods and statistical treatment of data.

The aim of the research is to determine the innovations implemented in small businesses in Kapsabet town and their effects on the same.

Research Design

A cross-sectional survey design which is analytical and descriptive in nature was used to study the relationship between the organizational learning, innovation and firm performance. This study will utilize a cross-sectional survey design because it is flexible in both quantitative and qualitative data collection. This design will enable the study to be carried out at a particular time and the notion of combining quantitative and qualitative data in a case study research that will offer the promise of getting closer to the whole of a case in a way that a single method study may not achieve. Quantitative data analysis is used to describe the statistics of the scores using indices that described the current situation and investigate the associations between the study variables using information gained from the questionnaires.

Target Population

The research was conducted at Kapsabet. The study targeted the correspondents who are small business men with different innovations in the organization, its importance to the organization and to the customers at large. The population of the study will comprise of only SMEs that have been in operation for a period not less than two years and are registered. According to the preliminary visit carried out, the researchers estimated to have 56 respondents. Therefore, the population of the study was 56.

	Managers	Workers
Nandi Tea Farmers Association	1	7
Lessos Springs	1	6
Koisagat Juakali Artisans	1	12
Mosop Tree Treatment plant	2	17
Kaps Woodworks	1	8
Total	6	50

Sample Population

The sample population of our study was 49 business individuals. This number effectively represents the workforce as per their minimal number. The number effectively will represent the population of the workers and the customers of the target businesses as per their minimum number.

	Managers	Workers
Nandi Tea Farmers Association	1	6
Lessos Springs	1	5
Koisagat Juakali Artisans	1	11
Mosop Tree Treatment plant	1	14
Kaps Woodworks	1	7
Total	5	44

n= N / (1+Ne²)             Where: n: sample population

N: population size

e: margin of error

The population size was 56 recipients and therefore with 7% margin error, the sample population was 49 recipients.

Data Gathering Techniques

This research was based both Quantitative and Qualitative Data collection methods. Quantitative data collection methods rely on random sampling and structured data collection instruments that fit diverse experiences into predetermined response categories. It is concerned with testing hypotheses derived from theory estimating the size of a phenomenon of interest. Face -to -face interviews was conducted with the involved business people.

Questionnaires were administered during the process of collecting the primary data. These questionnaire were designed in a systematic way of covering adequate and relevant almost all aspects of the study. The data collected from the primary sources was arranged sequentially and tabulated in a systematic manner. Secondary data required for the study were collected from books, magazines, journals, newspapers, past research, reports and various websites.

Qualitative data collection methods alsoplay an important role in impact evaluation by providing information useful to understand the processes behind observed results and assess changes in people’s perceptions of their well-being. This helped generate evaluation hypothesis, strengthening the design of survey questionnaires and expanding or clarifying quantitative evaluation findings. These methods are characterized by the following attributes: they tend to be open-ended and they use triangulation to increase the credibility of their findings.

Sources of Data

The primary sources of data used by the researchers to gather the information include; observation, face-to-face interviews and structured. The questionnaires were both open and close ended questions which the correspondents are to answer giving the researcher a broader idea on the topic researched on. This enabled the researchers to collect unbiased first-hand information in a convenient way. Another source of the data was from the internet and text books.

Research Instruments

The research instruments used in collecting the information include: observation, use of questionnaires and interview that helped the researcher in the review of literature, objectives and conceptual framework. The questionnaire contained items which mainly are close or fixed alternative. Observation helped clarify the responses received through questionnaires while interview was used to collect data that was captured in the questionnaires.

Statistical Treatment of Data

The data from the field was compiled, sorted, edited and coded to have the required accuracy, quality and completeness. It was then entered into the computer using the Statistical Package for Social Sciences (SPSS v. 20.0) for analysis. During the analysis of the data, descriptive statistics was used to present the results of the sample characteristics. Correlation analysis was also used to determine the degree of relationship between organizational innovations, learning and firm performance of SMEs. Multiple regressions were also used to predict the performance of SMEs.

Ethical Consideration

The consent of conducting the study was obtained in accordance with the requirements established by the University of Eastern Africa Baraton. Permission of the data used was granted by the management of various small firms involved in the study.

DATA REPRESENTATION, ANALYSIS AND INTERPRETATION

As mentioned at the earlier in this paper, our research sought to answer some specific questions that relate to impacts of technological innovation in production to small businesses at Kapsabet town. This chapter deals with presentation, analysis and interpretation of data. This is presented using the descriptive statistics such as tables. The statistical package for social science (SPSS) was used to calculate the percentages and frequencies and help in coming up with the tables.

Table 4.1.The relationship between the gender of male and female of the respondents

Gender		Frequency	Percent
	Male	28	57.1
	Female	21	42.9
	Total	49	100.0

The table above shows the percentages of the male and female correspondents who were able to give the researcher their views pertaining to the impacts of technological innovation in production to small businesses in the region. The percentage of men was 51.1% and women 42.9%. This shows that these firms have more male workers as compared to female workers.

Table 4.2.The table below shows the relationship of the age brackets of the respondents in percentage

		Frequency	Percent
	18-24	5	10.2
	25-29	11	22.4
	30-34	14	28.6
	35-39	12	24.5
	40 and above	7	14.3
	Total	100	100.0

The ages of the respondents were as follows: those between ages 18-24 had the lowest percentage with 10.2%, those between 25-29 held 22.4%, those between the ages 30-34 consisted the highest percentage with and those with 28.6%, those with the ages between 35-39 consisted of 24.5% and those with 40 years and above consisted 14.3% of the total population of the my correspondents. The researcher found out that most respondents who are workers and employees in these firms in Kapsabet town are in the age bracket of 30-34 years.

Table 4.3.The table below shows the relationship the number of as per their levels of education in percentage.

		Frequency	Percentage
	No education	1	2.0
	Primary	8	16.3
	Secondary	21	42.9
	collage education	17	34.7
	Masters	2	4.1
	Total	49	100.0

The number of correspondents that were willing to participate in the answering of the questionnaire in percentages as per their levels of education was as follows: those with no education constituted 2.0%, those with a maximum of primary education constituted 16.3% while those with secondary education constituted 42.8% of the respondents. Those with a minimum of collage education comprise 34.7% of the respondents while only 4.1% of these respondents have their masters’ education.

Table 4.4. The table below shows the relation between the number of correspondents as owners, manager, and workers in percentage.

		Frequency	Percentage
	Owners	2	4.1
	Manager	5	10.2
	Workers	42	85.7
	Total	49	100.0

The number of correspondents that were willing to participate in the answering of the questionnaire in percentages was as follows: the owners who took part represent 4.1% of the respondents; the managers were 10.2% of my respondents. Among the remaining were the workers with the highest percentage of 85.7%. These workers work at different capacities and levels in their respective firms.

Table 4.5. The table below shows the relation between the firms and their registration status in percentage.

		Frequency	Percentage
	Yes	45	91.8
	Partly	3	16.2
	No	1	2.0
	Total	49	100.0

As per the table 4.5, only 2% of the respondents companies are not registered yet, 16.2% of them are still n the registration process while 91.8% of these respondents’ companies and already legally registered as per the government’s requirements.

Table 4.6. The table below shows the relation in years that the respondents have worked in these organizations in percentage.

		Frequency	Percentage
	Less than 5 years	36	73.5
	5- 10 years	12	24.5
	Over 10 years	1	2.0
	Total	49	100.0

According to the table 4.6 above, most of the respondents, 73.5%, have worked with their organizations for a period less than five years. 24.5% of them have worked with their organizations for a period of six to ten years and only 2% of the respondents have worked with the organizations they are working with for a period more than ten years.

Table 4.7 The table below shows the correspondents views on the technological innovations at their workplace

		SD	D	N	A	SA
	We redesign the flow of work by the use of information communication technology	5	1	1	8	33
	We design the internet to deliver our services	11	4	6	3	25
	We do improve the internet to deliver our services	7	–	2	11	28
	We change the flow of work by eliminating certain activities	3	1	3	1	39
	We change the flow of work by merging certain activities	2	1	–	2	44

According to table 4.7, most of the correspondents’ redesign the flow of work by the use of information communication technology. 67.3% of the respondents strongly agree that their firms redesign this flow, 16.3% of them agree, 10.2% strongly disagree while only 2% are neutral and disagree respectively. More than 57% of the firms represented design the internet to deliver their services, 12.2% are neutral while about 30.6% do not design the internet to deliver their services. 79.6% of the respondents firms improve the internet to deliver our services, 14.3% strongly are not for this idea while 4.1% are neutral on this idea.

81.6% of the respondents agree that their firms change the flow of work by eliminating some of the activities, 8.2% of them do not while 6.2% are neutral. 93.9% of the firms represented agree to have changed the flow of work by merging certain activities while only 6.1% of the respondents are in the contrary.

Table 4.8 The table below shows the correspondents views on competence innovation at their workplace

		SD	D	N	A	SA
	We improve our leadership behaviors	5	1	1	1	40
	We improve our customer service behaviors	3	1	1	2	42
	We improve our conduct of handling information resources	1	2	3	4	39
	We make new networks for our organization	1	–	4	6	36
	We improve our task performance behaviors	6	2	1	3	37
	We change our behavior of handling organizational resources	11	3	1	4	30

According to the table 4.8 above, 83.7% of the firms represented by the respondents engage in activities that improve their leadership behavior, 12.2% disagree while 2.1% of them are neutral on this idea. 89.8 of the respondents are in agreement that they improve their customer service behaviors while 8.2% of the respondent firms disagree with this idea while 2% of them are neutral on this idea. 87.8% of the respondents agree that the firms they work with improve their conduct of handling information resources.

85.7% of the respondents make new networks for their organizations, only 8.2% don’t while 2.1% of them are neutral. 81.6% of the firms represented by the respondents improve their task performance behaviors, 16.3% on the contrary do not improve their task performance behaviors while 2.1% are neutral. On changing the correspondents’ behavior of handling organizational resources, 69.4% of the firms engage in this, 16.3% of them do not engage themselves while 2.1% are neutral about this idea.

Table 4.9 The table below shows the correspondents views on the entrepreneur innovation at their workplace

	SD	D	N	A	SA
It was my/our idea to start the business	39	–	–	2	8
I/we like doing something new to get new customers	12	1	2	4	34
If one approach to a problem does not work, I/we think of another	7	1	–	2	39
I/we enter new businesses by offering new lines and products	2	–	–	3	42
It was my/our idea that the company’s spending on new product development activities is increased	11	1	2	7	28
I/we invest in developing proprietary technologies	23	3	1	3	19
It was my/our idea that there is company emphasis on technological innovation	24	2	–	2	21
I/we caused the high percent of revenue generated from products that did not exist three years earlier	11	2	–	–	36
It was my/our idea to reorganize units and divisions to increase innovation	17	–	1	2	18
It was my/our idea to coordinate activities among units to enhance company innovation	20	3	1	1	23

According to the table 4.9, only 20.4% of the respondents participated directly in the formation of their respective organizations. 79.6% of them did not participate in this formation. 77.6 of the respondents like having something new often in order to get new customers. 22.4% however do not. 83.7% of the respondents think of some other approach to the impending problems if the one applied does not work out. The remaining 16.3% do not. 91.8% of the firms represented enter a new business by coming up with new lines and products not initially in the region. On the other hand, 8.2% of the firms enter the new business using the products they have in the market.

46.9% of the respondents strongly disagree with their organizations notinvest in developing proprietary technologies while 38.8% of the respondents’ firms invest in developing proprietary technologies. 44.9% of the respondents admit to have contributed in idea of the firms’ involvement and investments on the technology. 73.5% of the respondents feel that they are indirectly or directly the cause of a higher percentage of revenue generated from products that did not exist three years earlier. Only 57.1% of the respondents feel it was their idea either as individuals or group to reorganize the units and divisions in order to increase innovation. 36.7% feel the contrary while 2% are neutral.

Table 4.10 The table below shows the correspondents views on the sales growth innovation at their workplace

	SD	D	N	A	SA
My/our  sales volume have increased since 2013-2014	2	1	–	2	44
In addition to my/our old customers, there is increased demand for  products from customers who never bought from me/us before	–	–	–	1	48
My/our  customers have increased on their purchasing volumes	2	1	3	2	41
In relation to the resources committed, my/our overall market performance has improved since 2013-2014	1	–	4	6	38
Over the last 3 years I/we have had remarkable market growth for my/our company	3	2	1	2	41

The table 4.10 above shows the correspondents views on the sales growth innovations where 93.9% of the respondents are in agreement that their firms have grown positively in volume during 2013-2014.  All the correspondents feel that they have hard increase in the number of customers with an increase in demand of their products. 87.8% of them feel that their customers have increased in their purchasing volume while only 6.1% of the respondents feel the contrary. 6.1% of them are neutral in this matter.

In relation to the resources invested, 85.7% of the firms represented have their overall marketing performance has improved since 2013-2014. Only 2% of the firms have had the contrary while 8.2% of them are neutral in this. 87.8% of the firms have had remarkable market growth while 10.2% of them are silent in this matter. 2.6% of them are neutral.

Table 4.11 The table below shows the correspondents views on the sales growth innovation at their workplace

	SD	D	N	A	SA
We redesign different strategies to meet our objectives	7	2	4	6	30
We review the functions of departments in our organization	3	1	2	7	36
We review performance plans in our organization	2	–	1	4	43
We improve our systems of handling organization risks	4	1	2	5	37
We review our programs	1	1	4	2	41
We have improved on the time our customers take to get served	3	2	2	3	39
We review the job descriptions of different jobs in our organization	25	1	2	1	20
We have improved the methods of delivering our services	16	3	1	1	28

According to table 4.11, 73.7% of the firms represented redesign different strategies to meet their objectives. 18.4% do not while the remaining 7.9% of the respondents are neutral. 87.9 of the respondents agree that their organizations review the functions of departments in their respective organization. 8.2% of them disagree while only 3.9% of them are neutral. 93.9% of the firms represented review their performance plan, while only 4.1% of them do not. 85.9% of improve their systems of handling organization risks while 10.3 do not. 3.8% of them are neutral in this matter.

87.8% of the firms’ review their programs, 8.2% are not certain while 4% do not review their programs. 85.7% of their firms have improved on the time taken to serve their customers. Many of the firms, 53.1%, review the job descriptions of different jobs in their respective organization while only 42.9% do review. On the methods of delivering services, 59.2% of the firms have improved on their services while 38.8% of them have not improved in this.

SUMMARY, CONCLUSION AND RECOMMENDATION

This chapter is a summary of the study it represents the majority research findings the conclusion drawn as well as the recommendation made and areas of research as expressed in this chapter. The main purpose of this research was to impacts of technological innovation in production to small businesses at Kapsabet town.

Summary of the findings

Technological innovation

The researchers found out that majority of the respondents had introduced new changes in their products, processes or service technology. The research also revealed that technological innovation was highly acknowledged as having direct effect to the growth of the business in terms of boosting its sales. Majority of respondents believed that technological innovation influenced sales turnover by attracting new customers. Technological innovation was positively correlated with other types of innovation practiced by garment Small and Medium Scale Enterprises in Kapsabet Town with the results showing that all types of innovations were affected by technological innovation including the growth of the business. This justified (Roper, 2007) findings that if innovation is successful, the share of such innovated products is likely to increase sales of the firm by removing non value adding steps from the  work flow hence affecting the whole business. The study also found out that as much as most respondents acknowledged technological innovation, not all introduced new product, process or design in their businesses operations.

Administrative innovation

It was established that majority of respondents introduced new techniques and practices for integrating various information with aim of making informed decisions. However it was also found that few enterprises introduced new organization structure with aim of increasing employee’s initiative and overcoming problem of hierarchy. Other administrative innovation techniques such as introduction of new set of practices and processes around job design and product quality were found to be widely practiced by some firms.

Firms which practiced these techniques reported better sales as the correlation analysis showed a positive relationship. The findings were in line with (Becheikh, Landry, & Amara, 2006) results which disclosed that among various types of innovation, only administrative innovations showed their predicting power on sales. It was also established that firms which acknowledged benefits of management innovation believed the practice motivated stakeholders by making them feel appreciated. Some firms believed that practice of management innovation helped them identify and meet specific customer needs and get maximum output from production processes.

According to this perspective, an individual puts forward an innovative solution to address a specific problem that the organization is facing and he or she then champions its implementation and adoption as found out by (Lehtimaki, 2001) in her study of managing innovation process in small companies in Finland.

Strategic innovation

Few among the respondents’ had not discovered yet new source of supply of raw materials. This study also found out that majority of enterprises had strategic partners with suppliers, customers, trade and professional associations as well government agencies. Moreover, it was established that belonging to networks and linkages provides the entrepreneurs with necessary information to provide relevant solutions to customer needs. Physical location was found to be beneficial in increasing sales by majority of respondents who observed that cluster location is ideal because of the reasons that include:

• It promotes complimentary sales
• Helps in development of infrastructure

Results of past studies have generally reported positive associations between proactive competition strategies and innovation by firms. For example, (Turock, 2001) reported that firms adopting proactive strategies had the highest levels of innovation and customer orientation.

CONCLUSION

This study revealed that production innovation contributes heavily to the growth of SMEs at Kapsabet town. It was also concluded that as much as entrepreneurs acknowledged the role of innovation in enhancing business growth, not all businesses adopted innovative strategies in their processes probably because of lack of support mechanism in regard to cost implication and benefits. Innovation practices in SMEs tend to be much less formalized and based more on the inspirations and preferences of the owners and managers.

RECOMMENDATIONS

This research recommends that a supportive mechanism that will provide information on various types of innovation to the small businesses at kapsabet town to enable them adopt to innovative approaches in their practices from production to distribution of finished products is essential for better growth in the region. These small scale enterprises need to do an evaluation of their strengths and weaknesses to establish their competitive advantage in their markets for a better growth.

For better performance, SMEs need to engage in value addition activities as studies have shown that such activities have potential to increase their sales turnover. The study also recommends the promotion of innovative practices by small enterprises in order to realize growth and profitability. This will contribute effectively to sustainable development; create wealth for the owner, employment opportunities and poverty alleviation was the results. To realize these, adequate information on innovation practices should be availed to the entrepreneurs so as to have clear plan to implement preferred innovation practices.

Much emphasis needs to be put on production innovation among other innovation strategies because it has been established that production has more influence on growth of small scale enterprises in the region. Therefore, the production activities should be designed and changed to suit the ever changing end users expectations and preferences.

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Questionnaire

Dear Respondent,

We are student undertaking a research study as an academic requirement in partial fulfillment for the Bachelor’s degree in Business at the University of Eastern Africa Baraton. This questionnaire is intended to facilitate the study on the impacts of technological innovation in production to small businesses at Kapsabet town

The information provided for this research will be purely for academic purposes and the recommendations made of great importance to small scale businesses business within the region of focus and even beyond. The information provided here will be treated with utmost confidentiality.

Section A: General Information

Please tick appropriately for the questions that follow below:

Gender: Male (  ) Female (  )

Age Group: 18-24 (  ) 25-29 (  ) 30-34 (  ) 35-39 (  ) 40 & Above (  )

Level of Education: No education (  ) Primary (  ) Secondary (  ) Bachelor Degree (  ) Masters ( )

What is your position in the firm: Owner (  ) Manager (  ) Employee (  )

Is your company registered? Yes (  ) Partly (  ) No (  )

How would you best describe your business?

Partnership (  ) Sole Proprietorship (  ) Limited Liability (  )

How long have you been working in the same business?

Less than 5 years (  ) 5- 10 years (  ) Over 16 years (  )

SECTION B: TECHNOLOGICAL INNOVATIONS

Please tick according to your level of agreement or disagreement with the statements below:

	Technological Innovation	SD	D	NS	A	AS
1	We redesign the flow of work by the use of information communication technology	1	2	3	4	5
2	We design the internet to deliver our services	1	2	3	4	5
3	We do improve the internet to deliver our services	1	2	3	4	5
4	We change the flow of work by eliminating certain activities	1	2	3	4	5
5	We change the flow of work by merging certain activities	1	2	3	4	5
	Competence Innovation
1	We improve our leadership behaviors	1	2	3	4
2	We improve our customer service behaviors	1	2	3	4	5
3	We improve our conduct of handling information resources	1	2		4	5
4	We make new networks for our organization	1	2	3	4	5
5	We improve our task performance behaviors	1	2	3	4	5
6	We change our behavior of handling organizational resources	1	2	3	4	5
	Entrepreneur Innovation
1	It was my/our idea to start the business	1	2	3	4	5
2	I/we like doing something new to get new customers	1	2	3	4
3	I/we are never entirely happy with the way in which things are done	1	2	3	4	5
4	If one approach to a problem does not work, I/we think of another approach	1	2	3	4	5
5	I/we find new niches for products in current markets	1	2	3	4	5
6	I/we enter new businesses by offering new lines and products	1	2	3	4	5
7	It was my/our idea that the company’s spending on new product development activities is increased	1	2	3	4	5
8	It was my/our idea that the number of new products are added by the company	1	2	3	4	5
9	I/we invest in developing proprietary technologies	1	2	3	4	5
10	It was my/our idea that there is company emphasis on technological innovation	1	2	3	4
11	It was my/our idea that there is company emphasis on pioneering technological developments in the company	1	2	3	4	5
12	I/we caused the high percent of revenue generated from products that did not exist three years earlier	1	2	3	4	5
13	It was my/our idea to reorganize units and divisions to increase innovation	1	2	3		5
14	It was my/our idea to coordinate activities among units to enhance company innovation	1	2	3	4	5
15	It was my/our idea to increase the autonomy of different units to enhance their innovation	1	2	3	4	5
16	It was my/our idea to establish procedures to examine new innovation ideas	1	2	3	4	5
17	It was my/our idea to designate formal idea champions	1	2	3	4	5
	Sales growth
1	My/our  sales volume have increased since 2012-2013	1	2	3	4	5
2	In addition to my/our old customers, there is increased demand for  products from customers who never bought from me/us before	1	2	3	4	5
3	My/our  customers have increased on their purchasing volumes	1	2	3	4	5
4	In relation to the resources committed, my/our overall market performance has improved since 2012-2013	1	2	3	4	5
5	Over the last 3 years I/we have had remarkable market growth for my/our company	1	2	3	4	5
	Structural Innovation
1	We redesign different strategies to meet our objectives	1	2	3	4	5
2	We review the functions of departments in our organization	1	2	3	4	5
3	We review performance plans in our organization	1	2	3	4	5
4	We improve our systems of handling organization risks	1	2	3	4	5
5	We review our programs	1	2	3	4	5
6	We have improved on the time our customers take to get served	1	2	3	4	5
7	We review the job descriptions of different jobs in our organization	1	2	3	4	5
8	We have improved the methods of delivering our services	1	2	3	4	5